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AAP Exam Study Cards > The ACH Network > Flashcards

The ACH Network Flashcards

1
Q

The NACHA Operating Rules allow ACH credits to be initiated how many days before settlement ?

A

2 business days

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2
Q

The NACHA Operating Rules allow ACH debits to be initiated how many days before settlement date?

A

1 business day

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3
Q

What are the two types of ACHs?

A
  1. Direct Payments via ACH
  2. Direct Deposit via ACH
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4
Q

This type of ACH payment includes ACH credits, which push funds into an account, and ACH debits, which pull funds from an account.

A

Direct payments

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5
Q

Which regulation empowers consumers to dispute transactions that they believe are unauthorized?

A

Regulation E

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6
Q

Under Regulation E, consumers have how many days after the statement date to report a transaction to their financial institution?

A

60 Days

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7
Q

Which party is known as the gatekeeper of the ACH system?

A

ODFIs

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8
Q

What type of ACHs are considered as Payroll, Government benefits, Annuities, interest payments and tax refunds.

A

Direct Deposit via ACH

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9
Q

This party is responsible for honoring appropriate stop payment orders made by a consumer or non-consumer.

A

RDFIs

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10
Q

This party utilizes a reasonable method to verify the identity of each originator and TPS at the time it enters into an origination agreement.

A

ODFIs

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11
Q

This party establishes, implements, and reviews each exposure limits.

A

ODFIs

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12
Q

Who does the ODFI have to enter an Origination Agreement with?

A

Each Originator or TPS for which it processes ACH transactions for

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13
Q

The Origination agreement must…

A
  1. Authorize the ODFI to originate entries.
  2. Agree to be bound by the NACHA Rules.
  3. Abide by the laws of the US.
  4. Include any restrictions on the types of entries that may be originated.
  5. Permit the ODFI to terminate or suspend the agreement
  6. Permit the ODFI to audit the Originator’s compliance with the origination agreement.
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14
Q

Authorizations from consumers must…

A
  1. Have clear and easily understandable terms.
  2. Be easily identifiable as an authorization.
  3. Include revocation language that instructs the receiver of the time and manner in which the receiver must notify the Originator of revocation of authorization.
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15
Q

Originators must not originate debit entries…

A
  1. For settlement prior to the settlement date authorized.
  2. Outside of an authorized dollar range or different than an authorized dollar amount.
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16
Q

How many days does the originator have to provide a written notification to the consumer receiver stating the change for a new amount and effective date of the new amount?

A

10 Calendar Days

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17
Q

The ODFI must provide a copy of Authorization from the consumer to the RDFI within how many days?

A

10 Banking Days

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18
Q

The originator must retain a reproducible record of an authorization for how long after termination of the authorization?

A

2 Years

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19
Q

This SEC Code is a credit or debit entry pursuant to a standing or single entry authorization to a consumer account of the receiver.

A

PPD

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20
Q

This SEC code is a check conversion where the check was provided to the Originator in person. The receiver will receive paper check back at purchase and sign an authorization for the Originator.

A

POP

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21
Q

This SEC code is a check conversion where the check was provided to the Originator via mail or drop box or in person at a manned bill payment location.

A

ARC

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22
Q

This SEC code is a conversion where the check was provided to the Originator in person at the point of purchase or at a manned bill payment location, and the Originator decides in the back office to submit the item through ACH.

A

BOC

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23
Q

This SEC code is a check conversion where the check is being re-presented for payment.

A

RCK

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24
Q

This SEC code is debit entries pursuant to an authorization obtained from a consumer receiver via the internet or wireless network to transfer funds from a consumer account. They can be either Single or Recurring.

A

WEB

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25
Q

This SEC Code is a single-entry or recurring debit pursuant to a consumer receiver’s oral authorization obtained over the telephone. It can only be used when there is an existing relationship between the Originator and the Receiver or when there is not an existing relationship between the Originator and Receiver, but the receiver initiates the phone call.

A

TEL

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26
Q

This SEC code is considered a corporate entry meaning that this entry is originated by one organization to/from another organization.

A

CCD/CTX

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27
Q

For corporate transactions and inbound international ACH transactions entries to a corporate receiver, the ODFI must provide a copy of the corporation Receiver’s authorization or Originator’s name and phone number or email address, within how many days of receiving a written request from the RDFI?

A

10 Banking Days

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28
Q

These are small ACH credits, paired with equivalent ACH debits, used to verify that an account is accepting ACH transactions.

A

Micro Entries

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29
Q

What is placed in the company entry description field for Micro Entries?

A

ACCTVERIFY

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30
Q

This party must monitor the volume of forward and return micro entries as part of their fraud detection policies.

A

Originators

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31
Q

This is the date which the originator intends the file to settle.

A

Effective Date

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32
Q

This is the date in which the entry posts to the receiver’s account. It is inserted by the receiving ACH Operator.

A

Settlement Date

33
Q

Prearranged payment and deposit credit entries must be made available to the RDFI by its operator by what time?

A

5:00pm on the banking day prior to the settlement date.

34
Q

Prearranged payment and deposit credit entries, RDFI must make the credits available to the receiver for withdrawal by?

A

The opening of business on the settlement date.

35
Q

This party credits the consumer’s account in the amount of the unauthorized debit.

A

RDFIs

36
Q

An RDFI has the option to obtain permission from the ODFI to return what type of entries?

A

Corporate Entries

37
Q

How many days does the ODFI have to dishonor a return?

A

5 Banking Days

38
Q

How many days does the RDFI have to contest a dishonored return?

A

2 Banking Days

39
Q

By law a return fee entry may be initiated only for any entry return due to?

A

Insufficient or uncollected funds

40
Q

Return fee entries must be specifically labeled what in the entry description field?

A

“Return Fee”

41
Q

Notification of Change must be sent within how many days of settlement of the original entry to which the NOC relates?

A

2 Days

42
Q

The originator may initiate entries to a receiver’s account no sooner than how many days following the settlement date of the prenote?

A

3 Banking Days

43
Q

Corrections specified in a NOC must be made before the live entry is initiated. The live entry cannot be initiated earlier than how many banking days after the settlement of the prenote?

A

3 Banking Days

44
Q

An ODFI or the Originator/TPS can refuse an NOC within how many days if it contains incorrect or incomplete information?

A

15 Calendar Days

45
Q

The ODFI ensures its Originators/TPSs make the corrections to a prenote on the recurring entries by how many days?

A

Six banking days or by the next entry

46
Q

This is used by the Originator to pass information from the ODFI through the ACH Operator to the RDFI.

A

Addenda Records

47
Q

How many days does a financial institution have to provide addenda record information to the receiver if requested?

A

2 Banking Days

48
Q

If an unauthorized debit entry is processed, The debit will be returned to which party if it is disputed by the customer whose account is improperly debited?

A

ODFI

49
Q

If an unauthorized debit entry is processed, What is the ODFI obligated to do?

A

Correct any error that resulted from the Originator failing to obtain proper authorization.

50
Q

If an unauthorized debit entry is processed, The ODFI may be subject to sanctions under?

A

NACHA’S National System of Fines for violation of the NACHA rules.

51
Q

A customer calls your financial institution to request that a stop payment be placed on a check he wrote to a grocery store. After validating the customer’s identity, the employee states that she will note the stop payment on the customers account. How long will the stop payment be effective for?

A

Until the check is returned.

52
Q

Verbal stop payment orders are only effective for how long unless made in writing?

A

14 Days

53
Q

The RDFI is required to accept stop payment orders on recurring entries at least how many days in advance of the entry’s settlement date?

A

Within 3 days in advance of the entry’s settlement date and on other entries within enough time to act on the stop payment order.

54
Q

The RDFI has how many days from the unauthorized or improper debit entry’s settlement date to return the entry with one of the ACH return codes that require a WSUD

A

60 Calendar Days

55
Q

Unauthorized and improper corporate debit entries to a non consumer account are returned within how many days as corporate customer advises not authorized.

A

1 Day (R29)

56
Q

Upon the timely completion of a WSUD, the RDFI is required to give a consumer accountholder credit for the erroneous entry within how many days?

A

1 Business Day

57
Q

When a Financial Institution enters into an agreement with a TPS they must..

A
  1. Ensure proper due diligence before accepting a new client.
  2. Monitor new Originator file transmissions.
  3. Determine whether TPSs fit into the institution’s culture.
58
Q

Each participating depository financial institution and third party service provider, including TPS, must conduct this by December 31 of each year.

A

Internal or External audit of compliance with provisions of the ACH rules.

59
Q

How long must institutions/TPS retain proof of audit of compliance?

A

6 Years

60
Q

This type of Monitoring System for the ODFI expands to include reasons other than unauthorized transactions like high rates of return for insufficient funds.

A

Return Rate Monitoring

61
Q

This type of Monitoring System for the ODFI is used to review revocation practices to determine whether consumers are given a reasonable opportunity to revoke consent to ACH debits

A

Originator Revocation Practices Review

62
Q

This type of Monitoring System for the ODFI is used to look for patterns that may be an attempt to evade the limitation on the reinitiation of entries.

A

Transaction Monitoring

63
Q

This system is designed by NACHA to allow escalating levels of penalties against repetitive or egregious cases of violations of the NACHA Rules.

A

The National System of Fines

64
Q

Whether an entry is a credit or debit is determined with which participants stand point?

A

RDFI

65
Q

An institution is required to give a customer credit for an erroneous entry within how many days?

A

1 Business Day

66
Q

This party is the central clearing facility for the clearing, delivery and settlement of entries between and among participating DFIs.

A

ACH Operator

67
Q

Do all financial institutions originate ACH payments?

A

No

68
Q

Are all financial institutions that originate ACH payments also required to receive ACH transactions?

A

Yes

69
Q

What rules and federal regulations govern the processing of ACH transactions?

A
  • NACHA Operating Rules & Guidelines
  • Title 31 CFR Part 210
  • Regulation E
  • Regulation CC
  • Regulation D
  • UCC 4A
  • UCC 4
70
Q

When was the routing number policy adopted by the American Bankers Association?

A

1911

71
Q

When was the National standard for imprinting checks with machine readable numbers and characters in magnetic ink adopted?

A

1956

72
Q

Is a batch processing, store and forward system meaning transactions are accumulated throughout the day, sent to the ACH Operator, sorted by destination and transmitted in groups at specified times.

A

The ACH Network

73
Q

These are processed individually, in real time, and settled by debiting the Federal Reserve Bank account of the sending depository institution and simultaneously crediting the Federal Reserve Bank account of the receiving depository institution.

A

Wire Transfers

74
Q

This is known as Gross Settlement

A

Wire Transfers

75
Q

Which regulations govern Fedwire funds transfer transactions?

A
  • Regulation J
  • Subpart B
  • UCC 4A
  • Regulation CC
  • Bank Secrecy Act
  • Office of Foreign Assets Control
  • Federal Reserve Policy on Payments System Risk
76
Q

Can debits be sent via RTP?

A

No, only credits are available on the RTP System.

77
Q

What is the transaction limit for RTP?

A

$1,000,000 or less.

78
Q

What is one key difference between MasterCard send and Visa direct?

A
  • Visa Direct features (debit and credit) push/pull options
  • MasterCard Send is a credit-only platform

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